(September 24, 2021) A new report released by The Charity Report today, Pennies on the Dollar: Private Foundation Giving in Canada, outlined just how much Canada’s 20 largest private foundations increased their gross asset value over the 15 years from 2006 to 2019 and compares it to their giving. The 20 largest foundations make up 63% ($44.5 billion) of the entire gross asset value of 5,800 private foundations, $74.5 billion in 2019.
Studying the behaviour of the 20 largest foundations gives us a clearer picture of how the majority of private foundation funds are spent, how much they earn compared to what they give away, how they are using the charity tax credit system, and whether the taxpayer is getting a good return on their investment.
In 2006, the top 20 Canadian private foundations held 4.0 billion dollars in assets. In 2019, that had grown by about 40 billion to 44.6 billion dollars. Yet, their giving increased just over 700 million dollars. That would be the equivalent of someone with a net income of about 450 thousand dollars a year giving way about 7 thousand dollars to charity.
People have the perfect right to give a little, a lot or no money at all to charity. But the moniker of being “charitable” could not be justified by the giving practice of someone giving away such a tiny amount of their income. Why should private foundations be considered any different?
Below is a visual representation of the top 20 largest foundations in Canada and the tiny sliver of money they gave away compared to what they kept.
Over the past 18 months, The Charity Report has spoken to dozens of people in the sector who represent communities underserved by the traditional charity sector. These are mostly Black, Indigenous and communities of colour and well as people with disabilities and the LGBTQ2S+ community. Their needs have been exacerbated by the COVID-19 pandemic. And lobby groups such as Imagine Canada, have been pressuring the federal government heavily—and encouraging charities to do the same— to provide a $10 billion stabilization fund, saying the charity sector would collapse without the influx of government cash.
By way of background, each of the approximately 84,000 charities in Canada fall under one of 3 CRA designations:
- Public Foundations: Designation Code A – approximately 4,900
- Private Foundations: Designation Code B – approximately 5,800
- Charitable organizations: Designation Code C – approximately 73,000
Charitable organizations, group C, are the charities that execute charitable programs, groups A and B accumulate tax-credited wealth. And if the wealthiest members of group B are unwillingly to give some of that wealth to group C, the question remains why a charity lobby group, or any charity, should expect Canadian taxpayers, who have already forfeited income in tax credits, to fill the gap.
“Since The Charity Report began as a news source on the charity sector, we’ve been studying the impact of the disbursement quota, taking very deep dives into the data to empirically show how the system is inequitable,” says editor in chief Gail Picco, “but the more we look at the numbers, the more we are compelled to say the charity tax credit structure as used by ultra-wealthy private foundations is utter nonsense in the context of any definition of charity or altruism. It’s simply ridiculous to call what they are doing charitable. And the solution is not about shaving percentage points. It’s the difference between right and wrong, rich and poor, selfish and unselfish.”
Pennies on the Dollar shows how use of the charitable tax credit system was not, over the span of the 15 years studied, necessarily beneficial to the Canadian taxpayer. Thirteen foundations collectively made 1.43 billion in grants at the same time they collectively issued $3.23 billion in tax creditable receipts paid for by the Canadian taxpayer. In the period of those 15 years, Canadians would have had more money in their treasury, and been better positioned to spend that money on the common good, if these foundations simply did not exist. They are taking more than they are giving. The report identifies the specific foundations falling into this category.
“People ask me all the time about why these ultra-wealthy foundations, like the top 20 we’ve studied, continue to hold on so tightly to their money. Frankly, I’m confounded by their motivation. Is it ego? Do they want to leave bigger piles of money to their children or grandchildren? Do they think they don’t have to be accountable to anyone? I truly have no idea, but I also truly believe, based on the findings of this study—and others we’ve conducted—that it has to stop.”
The full report is available to subscribers only. Click here to subscribe.
(September 27, 2021) After a note from a subscriber, we added information to Pennies on the Dollar that points out the other way ultra wealthy charitable foundations cost the Canadian taxpayers money. While Pennies on the Dollar focuses on the charitable tax receipt system, a charitable foundation—whether private or public—also pays no tax on the earnings it makes off its investments, investments which don’t have to be used for any beneficial social impact, and which could, theoretically, be detrimental to the common good. (Investments in armaments, fossil fuels, tobacco companies
As we’ve shown the 20 largest private foundations earned 40 billion dollars from 2006 – 2019 but paid no tax on those earnings. If individuals or companies had assets whose value increased by 40 billion dollars, they could expect to pay about 10 billion dollars in capital gains tax.
In what other business is an organization defined by the 3.5% of the work it does, as opposed to 96.5% of what it does, in this case, wealth management?
Growth of Donor Advised Funds: Charitable Boon or Parking Lot? August 28, 2020